Khamenei’s death, which was confirmed by Iranian state media earlier today, triggered warnings about sharp retaliation from Tehran. US President Donald Trump announced that the 86-year-old leader had been killed on the first day of what he described as massive joint airstrikes.
Geopolitical tensions trigger risk-off sentiment, shifting investors away from equity markets and towards safe-haven assets like gold and silver. The precious metals had seen a record bull run in the beginning of this year, strongly rallying amid Trump’s tariff flip flops and other uncertainties, before seeing some correction.
Expect volatility in precious metals
Gold and silver prices are set to remain highly volatile with a gap up in the opening session tomorrow as the Middle East conflict involving renewed US and Israeli military action against Iran continues to dominate global risk sentiment, said Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities.
“A sharp escalation in hostilities, with coordinated strikes and retaliatory moves is fueling uncertainty and diminishing hopes of a quick diplomatic resolution. This elevated geopolitical risk can drive investors toward traditional safe-haven assets like gold and silver, and widely expect a gap-up opening for bullion markets,” he said.
As global equities and risk assets come under pressure, capital tends to shift into precious metals, which act as a hedge against uncertainty, the analyst explained. “Earlier moves have already pushed gold and silver prices higher in recent sessions, and this momentum could continue if the conflict intensifies further. Energy markets are also responding, with crude oil prices rising on fears of supply disruption through key routes like the Strait of Hormuz, which further adds to risk-off sentiment and supports bullion interest,” he further said.
Also read: Crude oil prices to cross $100? What experts predict after US, Israel attack on Iran
Profit booking to follow?
However, the impact may not be uniform. If there are any signs of diplomatic developments or indications of de-escalation, precious metals could see profit-taking after an initial spike of 3-6%, Trivedi said.
“We would expect the ongoing rally in US treasuries, oil, gold, and silver to extend. For India, the impact is typically magnified: higher crude oil prices widen the current account deficit, stoke domestic inflation, pressure the rupee, and could lead to FII outflows as global investors reduce risk exposure,” said Nachiketa Sawrikar, Fund Manager at Artha Bharat Global Multiplier Fund.
Gold rose to near a one-month high on Friday, trading at $5,230.56 per ounce. US gold futures for April delivery settled at $5,247.90. The increase marked a 7.6% gain for February this year.
Silver also climbed, with spot prices rising 4.8% to $92.60 per ounce, recording a 9.7% monthly gain. Platinum increased to $2,350.34 per ounce, while palladium fell slightly to $1,775.31.
Bears likely to take control of Dalal Street
Indian capital markets are expected to see a gap-down opening tomorrow amid the rising uncertainties. Ashish Anand, Partner at Fortuna Asset Managers, said that financial markets will probably experience risk-off behaviour together with foreign FIIs possibly selling holdings while market prices experience intense and fast price changes during the day.
Will Sensex, Nifty react amid escalating Middle East war after Khamenei’s killing?
“Our advice to investors is simple: avoid panic-led decisions. Businesses need to implement volatility as a strategic tool, which should be handled with care. People who want to invest for the long term should keep their Systematic Investment Plans (SIP) running and distribute their money between reliable, strong, and fundamentally strong companies. A person needs to follow asset allocation rules, which include stocks, gold, and bonds, because these guidelines help through unpredictable market times. We believe wealth is built through discipline, not reaction and the key theme would be “patience over pace,” said Ashish Anand, Partner, Fortuna Asset Managers.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
